Print - Yahoo Rejects Microsoft Offer

As expected, Yahoo's board of directors formally rejected Microsoft's buyout attempt for the company, arguing that Yahoo was worth more than the $44.6 billion offered. The Yahoo board met Saturday to discuss the deal, and issued a letter to the software giant Monday. Microsoft has yet to comment on the contents of that letter, which were leaked over the weekend.

While Yahoo's rejection was expected, it's unclear what happens next. Many expect Microsoft to raise its offer somewhat, perhaps by $5 billion to $12 billion. Yahoo reportedly is looking for something closer to $56 billion. But Yahoo is also risking a shareholder revolt by slowing Microsoft's purchase of the company. Stung by years of losses, many of Yahoo's shareholders would like to cash in on the heightened valuation of the company that has occurred in the wake of Microsoft's offer. Yahoo's shareholders lost $20 billion in just the previous three months.

Yahoo has spent the past week contacting partners and even competitors like Google to see what it can do to fight off the Microsoft purchase attempt. However, no rival suitor emerged, which wasn't surprising given the money involved. Only Google would have the financial wherewithal to pull off a Yahoo purchase, but that scenario is highly unlikely given the antitrust implications. And plans to partner with companies such as AOL or Google just weren't as lucrative as the Microsoft bid.

Microsoft also has an interesting option available to it: The company could approach Yahoo's shareholders directly with an offer, and force the ouster of Yahoo's board of directors. Such a move would be highly hostile, however, and would likely result in an exodus of key Yahoo executives, engineers, and other employees. Given the value of these people to the deal, it's unlikely Microsoft would take this course of action.

The whole "Microhoo" concept is ridiculous. Mini's take is spot-on:http://minimsft.blogspot.com/ But hey, it wouldn't be the first boneheaded move under the Ballmer regime, and it won't be the last.

Yahoo may be courting AOL, Google, and Disney if sources are correct. This was huge blunder on Microsoft's part. But not unlike the typical baffoonery of the idot Steve Ballmer...

"lotsamystuff" - Tell us again how you are not anti-MS? Sure, you throw out the occasional - "good job" or " I use MS Products" bone, but you are very transparent. --tayme

"Tell us again how you are not anti-MS?" OK. I'm not anti-MS. Tell me again how quoting the opinion of the ultimate Microsoft insider is 'Anti-MS'? I think this is a bad deal for both Microsoft AND Yahoo. Period. Anyone who cares about MS should feel the same--there's just no upside here. Mini him/herself says it best: "In fact, this still seems like a real dumb idea, like a staggering drunk trying to prop himself on an unwilling and lame adversary who wouldn't mind seeing the drunk facedown on the pavement." Microsoft is a SOFTWARE company, not an ADVERTISING company. You bet your sweet *** I care about what happens to Microsoft. This is a crappy path for them to go down, and trust me, if they keep doing it, it will be the beginning of the end of a once-great company. Again, quoting Mini: "I want to create software experiences that make people's lives delightful and better, not that sells them crap they don't need while putting them deeper into debt. I'm going to be in purgatory long enough as is." Amen.

@"lotsamystuff" - "Microsoft is a SOFTWARE company, not an ADVERTISING company." and...Google is an ADVERTISING company and not a SOFTWARE company. But of course, when we apply your anti-MS double standard, MS should do nothing but develop software, and any other IT company should "throw things against the wall to see what sticks". --tayme